Suspicion prices fixed via media interviews, press releases

Supermarket chain, major food maker raided in probe into suspected price fixing

Documents, computers taken from Shufersal; Strauss also raided; CEOs of both companies, as well as boss of Victory chain, said to be under investigation by competition authority

People shop for food at Shufersal, on September 21, 2020. (Yossi Aloni/Flash90)
People shop for food at Shufersal, on September 21, 2020. (Yossi Aloni/Flash90)

The Israel Competition Authority raided the offices of the country’s largest supermarket chain and a major food and beverage manufacturer on suspicion of price fixing, the companies said Tuesday.

A number of top officials at the Shufersal supermarket chain and the Strauss Group food company, including the former’s CEO Itzik Abercohen, were interrogated as part of the investigation.

Shufersal confirmed to the Tel Aviv Stock Exchange that Abercohen is under investigation and said documents and computer equipment were taken from the supermarket chain’s offices during the raid.

Strauss also said materials were taken from its offices, and senior officials were questioned.

According to Channel 12 news, Strauss Group CEO Giora Bardea is also being investigated.

Channel 13 news reported that the phones of some executives at both companies were seized.

Shufersal CEO Itzhak Abercohen speaks in a video statement released on November 5, 2021. (Screenshot)

The competition authority said it was looking at a number of suppliers and stores on suspicion that there may have been breaches of the laws governing competition, the Reuters news agency reported.

There were no further details given or companies officially named.

However, the Kan public broadcaster reported that the owner and CEO of the Victory chain of supermarkets, Eyal Ravid, was also summoned for questioning by the competition authority. Victory’s offices were not raided.

Strauss Group CEO Giora Bardea attends a conference in Tel Aviv, on December 2, 2019. (Tomer Neuberg/Flash90)

Senior officials at additional supermarkets and food producers are expected to be summoned for questioning in the coming days on suspicion of fixing prices via media interviews, press releases and financial reports, according to the Kan public broadcaster.

The outlet did not give any further details on how this was allegedly done.

The Tel Aviv Stock Exchange briefly halted the trade of stock in both Shuferasl and Strauss on Tuesday. Trading in Victory was not stopped.

Shufersal said in a statement that the company was “acting in accordance with the law and will cooperate fully with the law enforcement authorities.”

A Strauss factory in the southern town of Sderot, on May 8, 2014 (Moshe Shai/Flash90)

Grocery prices in Israel are seen as a perennial concern for many in the country, where the cost of living is consistently rated as a top issue for voters, trumping even security matters.

The last decade has seen major protests sparked by accusations of price gouging on seemingly mundane products, such as cottage cheese and pudding cups.

Shufersal and Abercohen were already under fire in recent days after a public outcry surrounding the supermarket’s website offering cheaper products to ultra-Orthodox consumers.

A Channel 12 news report last week found that goods offered on Shufersal Online, an online delivery grocery service run by the Shufersal grocery chain, were more expensive than the same products found on a second website it runs aimed at ultra-Orthodox consumers, which carries only products that have strict “mehadrin” kosher certification.

Abercohen suspended the discount website, which was aimed at customers with stringent kosher standards and large families, acknowledging the move was in lieu of extending the discounts to all Shufersal customers.

The grocery chain’s decision to suspend the discount website came after the television report sparked a stir among its customers and the head of Knesset’s Economic Affairs Committee MK Michael Biton said he would order the CEOs of Shufersal and other chains to appear before the panel for a special discussion on grocery prices.

Illustrative: People outside a Shufersal supermarket in Safed, on April 6, 2020. (David Cohen/Flash90)

Tuesday’s raids are not the first time Shufersal has been named in connection with alleged price-fixing.

In 2018, dairy giant Tnuva was hit with a NIS 25 million ($6.9 million) fine after it admitted to illegal price fixing with the Shufersal and Mega supermarket chains.

The fine was imposed on Tnuva over agreements it reached with the chains to raise prices on a number of its products, as well as an understanding with the stores in 2011 to set a uniform price on low-fat cream cheese made by the country’s three largest dairy producers, in order to prevent the other two, Strauss and Tara, from undercutting Tnuva, the Antitrust Authority said in a statement. Two former senior executives at the company were also fined NIS 75,000 ($20,000) apiece.

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